Health Policy Report

Both chambers enjoyed a week-long recess for the Memorial Day holiday, and return this week for a month-long work period.

The Week Ahead

Congress is expected to continue hammering away at a set of legislative staples in an effort to clear the decks before the August recess. For the Senate, who will reconvene today, that entails work on presidential nominations, the National Defense Authorization Act (NDAA), and the Water Resources Development Act (WRDA). Majority Leader Mitch McConnell (R-KY) has filed cloture on three judicial nominations to be considered first, with a cloture vote expected this afternoon on the nomination of Robert Weir to be a district-level judge in Kentucky. The timing on consideration of both the NDAA and WRDA has yet to be decided, but could come as soon as late this week.

The House, which will return to session Tuesday, has teed up consideration of both their version of WRDA (H.R. 8) and the first FY 2019 appropriations bill (H.R. 5895) to reach the floor of either chamber. The House version of the WRDA — a biennial authorization for water development projects — was approved on a voice vote out of the House Transportation and Infrastructure Committee in May, signaling bipartisan approval for the bill. Meanwhile, the appropriations bill will be a so-called “minibus” that combines the Energy and Water Development, Military Construction-Veterans Affairs, and Legislative Branch appropriations bills into a single package. Consideration of that package may be more contentious as the underlying Energy-Water appropriations bill was passed on a party-line vote out of the House Appropriations Committee in its markup last month.

It will be a significant week in political terms as well as voters in Alabama, California, Iowa, Mississippi, Montana, New Jersey, New Mexico, and South Dakota head to the polls on Tuesday for primary elections. California is being touted as the most significant state among them due to its unique “jungle” primary system that awards the top two vote-getters spots on the ballot in the general election, regardless of party. While that often results in races between two Democrats in the liberal state, the plethora of Democratic House candidates in a handful of districts could actually result in a “lockout” where Democratic candidates splinter the vote and two Republicans end up on the ballot this fall. National Democratic leadership views California as central to their campaign to take a House majority, and have strongly pressed California Democrats to coalesce in order to avoid a lockout situation.

Trump signed ‘Right-to-Try’ legislation into law last Wednesday, which would allow terminally ill patients enhanced access to experimental medical treatments not yet approved by the Food and Drug Administration (FDA). The bill had recently become a top priority for the White House, spurred by the long-time support of Vice President Mike Pence. President Trump stated that thousands of terminally ill Americans will “finally have hope and a fighting chance.” Opponents fought the law under the assumption it would weaken the FDA’s oversight, and argued the agency already has a way for terminally ill patients to use unapproved treatments, under which the FDA claims it approves more than 99 percent of requests.

Late last week, the architect of the bill, Sen. Ron Johnson (R-WI) sent a letter to FDA Commissioner Scott Gottlieb declaring that the bill’s opponents’ fears of a weakened FDA were, indeed, the true intention of the bill. Sen. Johnson said the FDA should not write any new guidance or regulation extending the agency's authority in this space – even if those regulations are meant to protect patients. He wrote the law “intends to diminish the FDA’s power over people’s lives, not increase it. It is designed to work within existing FDA regulations, definitions, and approvals processes.”

Sen. Johnson pointed to Commissioner Gottlieb’s recent statements that the agency could work to issue regulations that would balance patient safety with patients’ right to request unapproved drugs. The Commissioner had commented in the past that he wished to see changes to the legislation, but maintained last week that he supported the new right-to-try law. Director of the FDA Drug Center Janet Woodcock said the agency would work to carry out the law "in a manner consistent with Congressional intent and with FDA's public health mission." Sen. Johnson has requested a meeting with the FDA Commissioner to discuss the law’s implementation.

FDA Releases REMS Guidance Intended to Increase Generic Competition

Last week, the Food and Drug Administration (FDA) released two draft guidance documents designed to improve the clarity and efficiency of requirements for developing shared system Risk Evaluation and Mitigation Strategy (REMS) — the Development of a Shared System REMS and Waivers of the Single, Shared System REMS Requirement. FDA Commissioner Gottlieb issued a statement accompanying the widely-anticipated guidance, saying, “Through the new policies that we’re advancing today, our aim is to help generic drug makers get their products through the development and approval processes efficiently while maintaining the safety controls sought by the REMS.” FDA is providing a 60 day comment period on the draft documents, which is scheduled to publish soon in the Federal Register.

FDA Commissioner Gottlieb has repeatedly indicated that REMS reform is one of his top priorities and is necessary to prevent anticompetitive behavior in the prescription drug market. Last week’s guidance is the latest in a series of changes the FDA is making to improve the effectiveness of REMS. According to the draft guidance, “Waivers of the Single, Shared System REMS Requirement,” FDA will consider each waiver on a case-by-case basis, and will be guided by language in the statute, which states that FDA will waive the requirement when the benefits outweigh the risks. While the guidance does not appear to break much new ground, it does provide some practical tips for generic sponsors seeking a waiver. FDA emphasized that it will consider a waiver request at any time, but recommended that a generic sponsor seeking a waiver do so by the midpoint of the pending application review. The second guidance outlines the steps in creating a single shared REMS, including the submission steps and FDA’s role in the process.

The draft guidance follows the FDA’s decision to publish a list of 41 branded drug companies that it alleges have blocked access to drug samples in order to obstruct development of generic drugs. The guidance also is consistent with the goals and proposals included in the Trump administration’s drug pricing plan, ‘American Patients First.’ The guidance came less than two weeks before Health and Human Services Secretary Alex Azar is scheduled to testify before the Senate Health, Education, Labor, and Pensions (HELP) Committee on the administration’s drug pricing plan. At the June 12th HELP hearing, the Secretary is expected to highlight today’s development as well as the administration’s other timely actions impacting prescription drug pricing.

Congress's Summer Schedule Begins to Take Shape as House Eyes Opioids Votes

The picture has become clearer in recent weeks with regard to floor schedules and Congress’s legislative outlook through the August recess. After approving both a Senate-passed financial regulatory relief package and the FY19 National Defense Authorization Act — and following its high-profile failure on the farm bill — the House is looking to keep rolling through major items before breaking at the end of July. Starting this week, the lower chamber will take up the Water Resources Development Act (WRDA) and the chamber’s first floor consideration of an appropriations bill, namely a so-called “minibus” that combines the Energy and Water Development, Military Construction-Veterans Affairs, and Legislative Branch appropriations bills into a single package.

The House is also expected to consider the White House’s $15.4 billion rescissions package to Congress that cuts unspent federal funding in a modest effort to reduce the budget deficit. While a much more comprehensive package had been considered, the White House has trimmed down its request mostly target unobligated funds, meaning funds that are left over from programs that no longer exist or have not been reauthorized. The administration has proposed to eliminate $7 billion from the Children’s Health Insurance Program (CHIP), and $800 million from the Center for Medicare and Medicaid Innovation (CMMI), which officials stated is in excess of the funds needed in fiscal years (FY) 2018 or 2019. They also justify this cut by stating that CMMI will receive a new appropriation of $10 billion in 2020. Expect for the bill to be approved along party lines in the lower chamber, but stand little chance of consideration in the more closely-contested Senate.

The House Energy and Commerce Committee approved a slate of 32 opioid-related proposals earlier this past month after a lengthy and comprehensive markup process. The Ways and Means Committee has also held a markup on a separate series of bills, with House leadership hoping to eventually craft a single package that can be sent to the Senate. The exact nature and timing of that combination process — either at the Rules Committee or through a separate legislative vehicle — remains unknown, but floor consideration of an opioids package is expected before the end of June. Meanwhile, the Senate Finance Committee has taken the lead in the upper chamber, releasing a set of 22 bills that the Committee aims to mark up in the coming weeks. The Senate Judiciary Committee – which approved five opioid bills in a markup recently – and the Health, Education, Labor, and Pensions Committee are also expected to be heavily-involved as the Senate works towards its own opioids package.

Trump announced last Wednesday that drug companies would voluntarily lower drug prices in two weeks due to administration actions. The comments on the “voluntary massive drops in prices” were delivered by Trump at his signing of the “Right-to-Try” bill, at which he announced there will be “big news” to come soon. The administration announced a plan earlier this month to lower drug costs, mostly through regulatory action, but drug companies have viewed the proposal favorably. Additionally, the Department of Health and Human Services has not yet issued any new regulations related to drug pricing, but Secretary Alex Azar has indicated “bold action is on the way.” ‘

Among the highlights of the white paper, Sen. Cassidy specifically calls on Congress to pass the Bipartisan Stabilization Act, which would fund cost-sharing reduction (CSR) subsidies for individuals enrolled in a marketplace health plan, among other marketplace reforms. In addition, the wide-ranging paper offers ideas to lower drug costs for consumers, including banning so-called “gag clauses,” providing greater returns for innovative drugs, and supporting generic competition, as well as increased reliance on telemedicine, repeal of the medical device tax, and altering the Medicaid Institutions for Mental Diseases (IMD) exclusion.

In announcing the new white paper, Sen. Cassidy identified specific areas where he plans to introduce legislation, though he acknowledged that the Senate remains divided on policies addressing the affordability of health care. Instead, he intends for the paper and his legislation to spur further discussion on the various ideas. Sen. Cassidy will have an opportunity to highlight several of his drug pricing proposals during the Senate Health, Education, Labor, and Pensions Committee’s June 12 hearing focused on the administration’s drug pricing proposals.